Oman free zones

Oman free trade zones corporate services

  1. Oman has three Free Trade Zones (FTZ) and two Special Economic Zones (SEZ): i) Al Mazunah FZ ii) Sohar FZ iii) Salalah FZ iv) Duqm SEZ and v) Knowledge Oasis Muscat SEZ;
  2. Specific economic and free zones benefits include i) 100% foreign ownership, ii) tax exemption iii) lower quota requirements to hire Omani national employees and iv) zero customs duties. Each free zone has its own specific incentive packages;
  • Advantages and Disadvantages of Oman free zone companies

    Advantages of Oman free zone companies

    1. FZ and SEZ companies may be 100% foreign owned;
    2. There are no minimum share capital requirements for Oman free zones;
    3. Exemption on corporate taxes;
    4. No duties are imposed on goods imported and exported from the free zone;
    5. Oman free trade zone companies are allowed to trade within Oman without a local agent. A customs duty of 5% applies in these cases.
    6. Unrestricted repatriation of capital.

    Disadvantages of Oman free zone companies

    1. It is mandatory to lease physical office premises within a free zone;
    2. At least 10% of the free zone company’s staff must be Omani;
    3. Knowledge Oasis Muscat requires a paid- up share capital of US$52,000;
    4. Company licenses are renewable annually after FZ laws are complied with including submitting annual audited financial statements to the free zone authority;
    5. Some Oman free zones are still under construction.
  • Sohar Free Zone

    1. Sohar Port free zone is operational but still under development. Once finished it will cover 4,500 hectares at the town’s Port;
    2. The port will cluster business into the following industries: i) steel manufacturing and processing ii) trade and logistics iii) oil and gas iv) petrochemicals v) minerals and aggregates industry vi) ceramics vii) food logistics and food processing;
    3. Sohar Free Zone issues the following type of business licenses: i) industrial ii) light manufacturing and assembly iii) logistics iv) general trade and v) services;
    4. It offers 100% foreign ownership and 10 years of tax-free operations but requires companies to adhere to 15% Omanisation. The tax exemption period increases if the percentage of Omani staff increases;
    5. The free zone authorities boast ‘one-stop-shop’ incorporation procedures, shortening business setup to under three weeks.
  • Salalah Free Zone

    1. Salalah Free Zone opened in 2005 and is still also under active development. Once finished with all four phases of development, it will cover an area of 19 square kilometres;
    2. The free zone is adjacent to the super hub port of Salalah on the main equatorial trade routes. Salalah free zone has access to an international airport and Salalah port;
    3. Licenses offered are i) general trading including import, export & distribution and storage of all goods; ii) specialized trading of defined products, iii) services, and iv) industrial applications, for the import of raw materials, manufacturing of specified products and export of finished products;
    4. This free zone is particularly suitable for i) chemical and material processing, ii) manufacturing and assembly and iii) logistics and distribution;
    5. Salalah Free Zone companies can benefit from the US-Oman free trade agreement, that supplies custom duty free access on agricultural products and most of the industrial and consumer goods including textile and apparel products;
    6. In addition to 100% foreign ownership, other benefits of this zone include i) 0% corporate tax ii) 0% personal income tax iii) no customs or exercise duties on import/export of goods iv) no minimum paid up share capital requirements and v) reduced Omanisation rate of 10%.
  • Al Mazunah Free Zone

    1. Established in 1999, Al Mazunah offers 100% foreign ownership and 30 years of tax free operations. If a large number of Oman nationals are hired, then this tax holiday may be extended indefinitely;
    2. Unlike the rest of Oman, where 30% of employees must be Omani nationals, an Al Mazunah company need only hire 10% locals.
    3. Yemeni citizens working for Al Mazunah companies do not require work permits. The free zone is located just 4km from the Yemeni border in south west Oman;
    4. Suitable industries include light manufacturing, trading, and services.
  • Duqm SEZ

    1. The Duqm SEZ is one of the largest economic zones in the Middle East, with an area of 2,000 square km;
    2. The zone area is divided into eight sub-zones aimed at different type of investments, such as i) industry ii) sea port and dry dock iii) tourism iv) fisheries v) logistics, etc.
    3. The Zone counts with a seaport and an airport, which benefit export-oriented companies that invest in the area;
    4. Companies registered in this SEZ must comply with the Omanisation rate of 25% and enjoys 30 year income tax exemption.
  • Knowledge Oasis Muscat SEZ

    1. This technology park was inaugurated in 2003 and is located near Muscat International Airport;
    2. Knowledge Oasis Muscat caters to science, IT and knowledge-based businesses and organisations of all sizes;
    3. Unlike the other FZand SEZs in Oman, this economic zone has a minimum share capital requirement of US$52,000 (OMR 20,000);
    4. Omanisation requirements start at 10% and increase over five years to 25%.
  • Comparison of freezones

    Oman Free Trade Zone  Al Mazunah  Salalah  Sohar  DuqmKnowledge Oasis
    Summary
    Area covered by the free zone?3M sq. km6 sq. km45 sq. km25 sq. km778 sq km
    Most popular business sector in the zone?Light industriesManufacturing and logisticsPetrochemicals and logisticsLight industries and logisticsIT services
    Our Clients can setup a WFOE in the zone?YesYesYesYesYes
    Bonded warehouses available?YesYesYesYesNo
    Can hire foreign workers?YesYesYesYesYes
    Can secure offshore corporate finance?YesYesYesYesYes
    Can a FTZ company freely remit money abroad?YesYesYesYesYes
    Can trade with other parts of Oman?YesYesYesYesYes
    Time zone? (ahead of GMT)+4 hours+4 hours+4 hours+4 hours+4 hours
    Is there an airport nearby?YesYesYesYesYes
    Company registration
    Can the company be incorporated online?NoYesYesNoNo
    How long to setup the company?6 weeks4 weeks4 weeks6 weeks7 weeks
    How long to secure the business license?4 weeks3 weeks3 weeks4 weeks5 weeks
    Foreign investor approval required?YesYesYesYesYes
    Client must travel to Oman for company registration?NoNoNoNoNo
    Minimum statutory paid up capital requirement?US$0US$0US$0US$0US$52K
    Logistics considerations
    Physical office space required for new companies?YesYesYesYesYes
    Quality of utilities?ExcellentExcellentExcellentExcellentExcellent
    Average annual industrial space rental per 1000sq. m.?US$2,650US$2,300US$2,750US$3,100N/A
    Average annual warehouse space rental per 1000 sq. m.?US$2,600US$2,200US$2,500US$3,000N/A
    Attractive for setting up a manufacturing business?Yes (light manufacturing)Yes (manufacturing & assembly)Yes (light manufacturing)Yes (light manufacturing)No
    Quality of Wi-Fi?GoodGoodGoodGoodGood
    Average monthly electricity prices? (per Kwh)US$0.026US$0.025US$0.03US$0.026
    Proximity of sea port in kilometres?260km5km10km9km46 km
    Proximity of airport in kilometres?260km18km25km20km25Km
    Accounting and tax considerations
    Corporate tax rate (%)?0%0%0%0%0%
    Goods subject to custom duties within the zone?NoNoNoNoNo
    VAT imposed on transactions within the zone?NoNoNoNoNo
    VAT imposed on goods & services sold in the mainland from 2018?5%5%5%5%5%
    Tax incentives for manufacturing start-ups?YesYesYesYesYes
    Quarterly tax filing required?NoNoNoNoNo
    Annual tax returns to be submitted?YesYesYesYesYes
    Annual government inspection required?YesYesYesYesYes
    Annual audit required?YesYesYesYesYes
    Access to double taxation avoidance agreements?YesYesYesYesYes
    Corporate banking and financial considerations
    Recommended bank for corporate banking?National BankHSBCBank of SoharBank MuscatOman Arab Bank
    How long to setup the bank account?6 weeks6 weeks6 weeks6 weeks6 weeks
    Corporate visa debit cards available?YesYesYesYesYes
    Quality of e-banking platform?GoodVery GoodGoodGoodGood
    English e-banking platform available?YesYesYesYesYes
    Can companies make overseas payments in OR/USD?YesYesYesYesYes
    Can companies secure loans within the zone?YesYesYesYesYes
    Can secures loans from mainland Oman banks?YesYesYesYesYes
    Access to Private Equity/VC funds?YesYesYesYesYes
    Can the company list on the Muscat securities market?YesYesYesYesYes
    Labour considerations
    Can hire foreign employees?YesYesYesYesYes
    How long to secure the work permit?4 weeks4 weeks4 weeks4 weeks4 weeks
    Client must travel before securing a work permit?YesYesYesYesYes
    Can investors secure a permanent residency?YesYesYesYesYes
    Average monthly salary for local employees?US$4,000US$4,000US$4,000US$4,000US$4,000

Frequently asked questions

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For additional information on our free trade zones company services in Oman, please contact our in-house country expert, Mr. Petar Chakarov, directly:
client relationship officer - Petar
  • Mr. Petar Chakarov
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